Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension plan with approximately $1.6 trillion in assets under management, confirmed that Chief Investment Officer Hiromichi Mizuno will step down at the end of this month. A successor has not yet been named.
Mizuno’s term was originally scheduled to conclude in October but was extended to March. He joined in January 2015 as the fund’s first dedicated CIO, and reportedly led large transitions in the portfolio’s strategic asset allocation while adhering to a strong environmental, social, and governance (ESG) mentality.
The fund also announced that Masataka Miyazono will become the fund’s new president, and that Chairman Norihiro Takahashi is retiring at the end of his term at the end of March.
The news comes in tandem with a report from Nikkei of upcoming significant asset allocation changes at the fund. Nikkei reported that the fund will allocate nearly 25% of its portfolio to foreign bonds, incentivized by the relatively high rates of foreign bonds compared to lower-rated domestic bonds, and that it trimmed its allocation to domestic debt to make room for the change. Mizuno previously spearheaded a change in portfolio allocation to make more room for a domestic debt allocation by shying away from stocks to do so. The publication said GPIF would be left with an equally split allocation between foreign and domestic stocks and bonds.
The fund owns approximately 10% of the Japanese stock market and 1% of the global stock market. It recently announced in December that it will suspend its stock lending program that’s used for short sales since it runs “inconsistent” with its stewardship duties.
This seems to run concurrent with a lot of good news coming out of Mizuno’s leadership at the fund. For example, a Harvard Business School case study reported that Mizuno spearheaded an improved sense of corporate governance at the fund, through gender diversity and climate change programs.
The ESG theme that Mizuno helped shepherd is doing relatively well, with four out of five ESG investments outperforming their benchmarks.
“The radical part was thinking about all three. Many Japanese asset managers and investors were worried about governance,” said Harvard professor Rebecca Henderson. “It was the idea that you should focus on E and S as well when everyone was, like, ‘Whoa, why are you doing that?’ I mean, that was very countercultural. … We have a protagonist who’s absolutely trying to change the world.”